Globalization: Obama’s Great Plan

The United States wants to achieve its pivot toward Pacific nations.

Unlike Europe — which is threatened by deflation and tried by its exit from history — the United States is struggling to maintain its leadership over China. Despite no longer being the world’s superpower, it is neither giving up nor panicking. Thus, Obama’s United States is pursuing its reflation strategy and setting up a new diplomatic deal thanks to an agreement concluded with Iran on Nov. 24 in Geneva. For its part, China’s Xi Jinping affirms its choice to launch political, economic and social reforms, while agreeing to enter into a power struggle with Japan and South Korea over the unilateral establishment of a new air-defense zone, which includes the islands of Senkaku and Leodo.

Obama began his second term on a disastrous note, having to confront numerous problems: the National Security Agency scandal, Syrian conflict, standstill over immigration reform, and debate about the right to bear arms, as well as the major software bug that hindered the launching of “Obamacare.” Only 106,000 out of 7 million potential American beneficiaries were able to register on the official HealthCare.gov website, despite investments amounting to $630 million. Even worse, millions of Americans find themselves without health insurance after having given up their policies. So, the diplomatic breakthrough with Iran is in contrast to the domestic difficulties, making John Kerry the current administration’s strongman.

Obama’s great plan aims to reposition the globalization aspirations of the U.S. to revolve around three priorities: reflation and energy independence, ending the ongoing wars in Iraq and Afghanistan, and turning the Atlantic’s attention toward the Pacific.

Economic recovery is vital both to U.S. domestic policy and competition with China. Economic growth consists of effective and long-term debt leverage reduction, while energy independence will see the U.S. free of its dependence on oil imports and the Middle East. The U.S. is not wrong in its aim — reflation — nor is it wrong in giving priority to production and competition in its economic policy. Its monetary policy of lowering interest rates and devaluing the dollar, boosted through unprecedented monetary creation, has halted deflationary pressures. The tremendous effort the U.S. has made on labor productivity, the restructuring and recapitalization of banks, lower energy costs — thanks to nonconventional hydrocarbons and investment in new technologies — has revived its status as a production base. The growth rate is securely fixed above 2 percent, and unemployment has been reduced to 7.2 percent of the labor force. Despite all this, the effects of the crisis will be long-lasting, whether it is a matter of the federal government’s debt burden — 110 percent of gross domestic product — the risk of real estate and stock market bubbles — market prices have more than doubled since 2009 — or the approximately 22 million discouraged workers.

Corporate America’s comeback relies on four advantages: the superiority of American universities, bolstered by advances made in online education; the country’s appeal to entrepreneurs, savvy-minded people and capital is a result of risk culture coupled with a rule of law that is reliable and efficient; the oligopoly of Internet giants — Apple, Google, Amazon, Facebook, Twitter, but also IMB or Cisco — which run the e-economy; the 21st century network of bilateral trade agreements — trans-Pacific and trans-Atlantic projects that compliment NAFTA — play a role comparable to that of the assistance and security treaties of the Cold War by establishing themselves as institutions and standards of reference.

Withdrawing from Iraq and Afghanistan goes hand in hand with reinforcing the strategy for domestic defense. Since February 2013, this strategy has been centered on the fight against terrorism and supporting civic authorities in the event of a natural or industrial disaster. Two new clauses were introduced: solutions to the major problems that result at the intersection of megacities and basic infrastructure; and enhanced cooperation with Canada and Mexico to plan and organize security at the scale of the North American continent.

The Geneva agreement marks a diplomatic turning point in making the pivot toward Asia a reality, which had remained largely unfulfilled until now. The result of long-standing, secret negotiations, the agreement puts an end to the 35 years of confrontation between the U.S. and Iran, which have divided the Middle East into two blocks: the Sunni side, led by Saudi Arabia and supported by the west, and the Shiite side, led by Iran and supported by Russia and China. Obama’s wager on Iran takes into account Tehran’s opening under civilian pressure and the collapse of these blocks in the wake of the Arab Spring. Iran’s return to the oil market, just like the pressure on Saudi Arabia and Israel, allows for diplomatic movement in the Middle East and promotes an accelerated withdrawal from Iraq and Afghanistan. The U.S. has regained the freedom to refocus its strategic positioning around the Pacific, where the destiny of the 21st century will play out itself. The immediate challenge is providing aid to Japan, Korea, Taiwan, Vietnam, the Philippines, Malaysia and Brunei, which are all facing Beijing’s increasing territorial claims and its renewed military activism in the South China Sea.

Twenty-first century America is gradually emerging from the crisis of the 2000s. Its reconstruction period has only just begun. Its transition to a knowledge-based economy and shift toward the Pacific are far from complete. At a time when nationalistic rivalries indicate how much peace is at the mercy of the incidents in today’s Asia — as in Europe at the beginning of the 20th century — at least the U.S. is demonstrating a willingness to reform itself and continue to make history in the 21st century.